The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, while deleting the addition for payment of capitation fee to medical college, held that no opportunity for cross examination can be provided.
The aforesaid observation was made by the Delhi ITAT, when an appeal was filed before it by the assessee, as against the order of the Commissioner of Income Tax (Appeals), New Delhi, dated, 13.02.2019 for AY 2007-08.
The grounds of the appeal being that the CIT(A) has erred in holding that it was the burden of the appellant to establish that no amount of capitation fees has been paid to M/s Santosh Medical College, that the CIT(A) has erred on facts and in law in upholding the addition of Rs.32,50,000/- on account of alleged payment to M/s Santosh Medical College, without providing any opportunity of cross examination and relying upon the information collected behind the back of the appellant, and further that the impugned assessment order is arbitrary, illegal, bad in law and the violation of the rudimentary principle of contemporary jurisprudence, it was submitted by Adv.Shri Ruchesh Sinha, the counsel for the assessee that the first Appellate Authority has erred in upholding the addition in the hands of the assessee on account of alleged payment to M/s Santosh Medical College without providing any opportunity of cross examination and relying upon the information collected behind the back of the appellant.
The counsel for the assessee vehemently pointed out that the impugned assessment order is arbitrary, illegal, bad in law and has been passed in violation of rudimentary principle of contemporary jurisprudence, and therefore that, the addition made by the AO, which is later upheld by the CIT(A) may kindly be deleted.
With the Counsel for the assessee having further placed his reliance on the order of the ITAT, Delhi, dated 05.03.2019 in the case of Shri Naresh Pamnani Vs. ITO and subsequent order dated 04.10.2022 in the case of Shri Manjit Singh Gahlot Vs. ITO , he submitted that the AO or the Investigation Wing have not supplied copies of statement of Dr. P Mahalingam to the assessee and no cross examination to his statement have been allowed any stage, thus submitting that the addition made on the basis of information and material collected on the back of the assessee, therefore, cannot be tackled as valid basis for making addition in the hands of the assessee.
However, on the other hand Shri Om Prakash, the Sr DR, supported the orders of the authorities below and submitted that the addition made by the AO and uphold by the Ld. CIT(A) is sustainable as the assessee failed to substantial source of cash given to M/s Santosh Medical College as capitation fees.
Hearing the opposing contentions of either sides and thereby perusing the materials availale on record, the ITAT Panel comprising of Chandra Mohan Garg, the Judicial Member, observed: “The Sr. DR has not controverted the factual position and the facts and the circumstances of the present case are quite identical and similar to the facts in the said case of Shri Naresh Pamnani and Shri Manjit Singh Gahlot”.
“In view of foregoing discussion and considering the totality of the facts and circumstances of the case noted above in the light of material on record as well as Order of the Tribunal in the case of Shri Naresh Pamnani, Delhi, I am of the view that no addition could be made in the hands of assessee on account of payment of capitation fees. In view of the above, I set aside the Orders of the authorities below and delete the entire addition in the hands of the assessee.”, the Delhi ITAT thus held, partly allowing the assessee’s appeal.
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